February 8, 2001

2001/02 Cotton Area Expected to Rise Following Higher
World Cotton Prices

Foreign cotton area for the 2001/02 season depends on several factors, with the cotton price and those of in-country competing crops playing a crucial role. Domestic and world financial conditions also influence foreign cotton area along with government policies and weather. The Cotlook A-Index is the daily average of the five lowest-priced quotations of 15 comparable growths offered for sales by cotton-exporting countries. Generally, a very strong direct relationship exists between cotton area and the price index for the previous year (See Graph). The price line on the graph shows an average annual market year price beginning in 1991/92, and includes an average price from August-January for 2000/2001. During the first six months of the current marketing year, the price index averaged 15 cents above the same period a year earlier. Prices during the current marketing year have increased 3.3 cents to 64.2 cents per pound at the end of January, nearly 16 cents above the 2000 January price. This factor alone suggests that foreign cotton area in 2001/02 will be above 2000/01 area. However, area shifts also depend upon the price level of other crops in relation to the price of cotton and expected profit margins in comparison to these other crops. With these factors affecting area, preliminary indications are that foreign cotton area in 2001/02 should be roughly around 28.0 million hectares, compared with an estimated 26.6 million for 2000/01. For more detail on forecast, see FAS Post Cotton Reports for 2001/02. The countries highlighted in these reports accounted for approximately 69 percent of the estimated world's foreign area of 26.6 million hectares in 2000/01 on which 72 percent of the estimated 70.8 million bales of cotton were produced. All numbers in this report and in the following table reflect official USDA estimates as of February 2001.

* Forecast

For more information, please contact Ron Roberson with the Production Estimates and Crop Assessment Division on (202) 720-0879. email: roberson@fas.usda.gov.